SM Energy 2014 Eagle Ford Capex Budget Increased

SM Energy Production Guidance Increased Portfolio-Wide
SM Energy Eagle Ford Acreage Map

SM Energy Eagle Ford Acreage Map|Click to Enlarge

SM Energy revealed in mid-August that it will add $30-million to its $900-million Eagle Ford capex budget for 2014.

Company officials indicate the increase is due to higher than expected activity in SM’s non-operated acreage. The company currently holds approximately ~46,000 net non-operated Eagle Ford acres.

Read moreSM Energy-Mitsui Eagle Ford Carry Ends

SM Energy Revises Production Guidance Portfolio-Wide

SM Energy increased its portfolio guidance for 2014 by approximately 3% in August, 2014. In addition to its Eagle Ford assets, the company is active in the Bakken, Powder River, and Permian.

The revised production estimates take into account the company’s anticipated downtime in its operated Eagle Ford assets. During the third-quarter, SM will temporarily shut-in certain wells to conduct offset completion work. SM’s operated assets in the Eagle Ford (~144,000 net acres) are located primarily in Webb County, TX, with a portion in Dimmit County, TX.

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Baytex Energy Tackles Eagle Ford Debt with Bakken Sale

SM Energy Pays Baytex $330.5 Million for North Dakota Bakken Assets

Calgary-based Baytex Energy, a recent entrant into the Eagle Ford, announced in late June of 2014 that it’s selling its Bakken Shale assets in North Dakota to pay down a portion of its Eagle Ford debt.

In February, the company added 22,200 net contiguous acres in South Texas through its $2.8 billion acquisition of Aurora Oil & Gas, which closed in June of 2014.

Read moreBaytex Energy – Aurora Deal for Eagle Ford Assets – ~$2.6 Billion

In anticipation of the Eagle Ford transaction, Baytex conducted a contingent resources assessment of its assets. During that process, the company earmarked certain properties for divestiture, including its Bakken assets.

Read more: Baytex Energy May Sell Bakken Assets

Baytex Eagle Ford Debt Primary Reason for Bakken Divestiture

SM Energy will pay Baytex $330.5 million for 61,000 net acres in the Bakken. The transaction is expected to close toward the end of the third quarter with after tax net proceeds from the sale, estimated at $275-million. Company officials say the money will be directly applied against outstanding bank indebtedness.

Read more: SM Energy Grabs 61,000 Bakken Net Acres – $330 Million


SM Energy-Mitsui Eagle Ford Carry Ends

Second Quarter Sand Loading Tests Yield Positive Results
SM Energy Eagle Ford Map

SM Energy Eagle Ford Map | Click to Enlarge

In SM Energy’s second quarter earnings report released this week, the termination of the drilling and completion carry with its joint venture (JV) partner, Mitsui, was confirmed.

SM Energy is now responsible for funding its proportionate share of drilling and completion costs in the area. An increase in SM Energy’s capital guidance for 2014 was announced in the company’s first quarter earnings report to accommodate for the additional costs.

Mitsui’s $680-million carry commitment in the Eagle Ford provided needed capital funding to accelerate SM’s development in the play. SM Energy and Mitsui entered their Eagle Ford joint venture agreement in 2011.

Read moreSM Energy-Mitsui Eagle Ford Carry Will End in Q2 2014

SM Energy Eagle Ford Non-Operated Acreage Update

Net production in SM Energy’s non-operated portion of its Eagle Ford shale program for the second quarter of 2014 averaged 23,800 boe/d. That’s a 2% sequential increase over the first quarter of 2014 and a 37% increase year-over-year.

The operator made approximately 95 flowing completions during the second quarter.

SM Energy Eagle Ford Update in Operated Acreage

During the second quarter, SM Energy made 23 flowing completions in its operated Eagle Ford Shale program. The company’s operated net production in the Eagle Ford shale averaged 83, 200 boe/d in the second quarter of 2014. That’s a 9% sequential increase from the previous quarter and a 26% increase year-over-year.

SM Energy Sand Loading Tests Yield Positive Results

SM Energy has been shifting its Eagle Ford drilling and completion program toward longer lateral wells and completions with higher sand loading. Company officials say longer lateral testing is ongoing, but sufficient data on SM’s increased sand loading tests is now available from wells in Area 2 of SM’s operated Eagle Ford shale position to conclude that wells completed with higher sand loadings are more productive and have improved initial condensate yields.


Mitsui Eagle Ford Carry of SM Energy Will End in Q2 2014

SM Energy First Quarter 2014 Production Up in Operated and Non-Operated Acreage 17% and 2% Consecutively
SM Energy Eagle Ford Acreage

SM Energy Eagle Ford Acreage | Click to Enlarge

SM Energy saw net production increases in both its’ operated and non-operated acreage of 17% and 2% consecutively. In the second quarter of this year, SM Energy expects the drilling and completion carry provided under its acquisition and development agreement with Mitsui to be exhausted. SM Energy made this announcement in December 2013, when the company released it’s 2014 capital budget.

In 2011, SM Energy entered a joint venture with Mitsui, whereby 39,000 net acres were sold to Mitsui for total commitments of $680 million (>$17,000 per acre).

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SM Energy Completes 95 Eagle Ford Wells in 2013 – 74,800 boe/d in Fourth Quarter

SM Energy Oil Production Rate Down Slightly for the Fourth-Quarter in the Eagle Ford
SM Energy Eagle Ford Production

SM Energy Eagle Ford Production | Click to Enlarge

SM Energy made 95 flowing completions in its operated Eagle Ford Shale acreage in 2013, with 20 of those completions in the fourth-quarter. 

In non-operated Eagle Ford acreage, the operator completed 84 gross wells in the fourth-quarter. 

The company had production of 74,800 boe/d in the Eagle Ford in the fourth-quarter. Although production was at its highest during this time, there was less oil production.

[Read more…]

SM Energy Plans 100 Operated Eagle Ford Completions in 2014

Will Spend $250 Million More in 2014 Due to Mitsui's Cost Carry Being Exhausted
SM Energy Eagle Ford Map

SM Energy Eagle Ford Map | Click to Enlarge

SM Energy plans to spend $900 million in the Eagle Ford in 2014.

Approximately $650 million is planned for the company’s operated position where 100 Eagle Ford completions are expected. An additional $250 million will be spent on acreage operated by Anadarko.

The company’s costs carry from Mitsui will be exhausted in the first half of the year. From that point, SM Energy will be responsible for its working interest share of costs.

Read more: SM Energy and Mistsui Agree to Eagle Ford Joint Venture

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